Trust Fund Blues

Publication
Article
Physician's Money DigestJuly15 2004
Volume 11
Issue 13

As interest rates sink, beneficiariesof trusts that pay out income but notprincipal are being caught in a revenuesqueeze. In some states, though, there'srelief for these beleaguered beneficiaries,if they can get their trustees to goalong with them. Over the past fewyears, 14 states have offered trustees theoption to convert a conventional trustinto a total-return unitrust, bringing thenumber of such states to 17. A unitrusteffectively lumps principal and incometogether and pays out a percentage ofthe total, usually around 3% to 5%. In35 states and the District of Columbia,beneficiaries can request that a trusteeuse the "power to adjust," under whichthe trustee can dole out some principalas income. Talk to your financial advisorabout the details.

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